Four and twenty blackbirds baked in a pie ...

As I was watching the TV News about the News of The World phone hacking scandal, and listening to the multiplicity of claims and counter claims, the savage sound bites and accusations of innocence, ignorance and incompetence, I was reminded strongly of a primary school playground. I remembered my children’s frequent cries of “Oh [Brother’s name]!, “Oh, [Sister’s name]!”, and their regular and passionate protestations of the other’s guilt – we loved it at the time and still laugh about the memory. We know and cherish how children behave, but it is disheartening to see and hear influential and powerful adults doing the same.

In fact, in business terms it is worse than sad, it is wasteful. We are utterly passionate about reducing waste, it is one of the most cancerous of business costs. It reminded me that The Cost of Behaviour remains one of the largest and least understood hidden costs of business today.

Philip Crosby was one of the fathers of the Quality Revolution, the set of ideas that has transformed manufacturing and service performance all over the world, and that is starting to creep into the unwilling and resistant environment of public sector services. Like many other truly great ideas, Crosby’s was very simple – he asked “What is the Cost of a Quality Failure?”

The application of this simple question drove manufacturing industry through the Quality & Reliability transformations that, for example, helped the Japanese Motor Industry devastate its European competitors. The same happened in Consumer Electronics and progressively in many other industries. Now we all expect that what we buy will work, and keep on working – and we have consumer protection laws to support those expectations.

Eventually, the same thinking spread to the management of Service Performance and, in many sectors we are now beginning to have significantly different expectations than even as recently as, say, 10 years ago. Just think about telecommunications for example – at last customer service is improving fast and customers are making buying decisions based on experience and not just on tariffs. Many mass retailers have twigged that they have to deliver not just “best prices” but also a good experience. We, the great British Public, are starting to have common expectations about the behaviours of those who supply and serve us. In many sectors, business management are struggling to catch up – better not mention the Post Office or most of the Banks.

The businesses that are going to prosper, with employees who will have a more certain future, are those who outperform expectations consistently and sustainably. They are what we call “Beyond Excellence” and they make much more money than anyone else (all of which has been proved by extensive research, but we won’t get into those details in this blog).

We have learned from experience, backed by that extensive research, that how an organisation thinks and behaves, the deep seated managerial and behavioural values and competences of a business, are the main differentiator of whether over time they will substantially outperform their competitors and successfully withstand unpleasant surprises.

The Cost of Behaviour is a powerful tool to test and challenge the perceived organisational health of a company – it asks the same question as Crosby but in a different context – “What is the Cost of a Failure in Behaviour?” We have identified a hierarchy of Costs of Behaviour.

They include, because of course they still apply, the existing Quality Failure Direct Costs

• Consequential Costs (4)
• Compliance Costs (4)
• Inefficiency Costs (6)

But now we introduce the added dimensions of Failure of Behaviour Costs

• Relationship Costs (6)
• Comprehension Costs (7)
• Motivation Costs (5)
• Judgement Costs (8)

As you can see, there are subcategories within each, the number of which is indicated in the brackets.

In every case, just as in Crosby, the category describes the adverse outcome that results from a failure of behaviour as described. For an example in the Comprehension category - an Avoidance Cost might be the cancellation of an order after avoiding taking a phone call from a dissatisfied customer.

It is going to be interesting to see how this News International story looks when viewed through the insights these Cost of Behaviour criteria can offer us. We’ll do that in our next post – watch this space!.

The Cost of Behaviour is brought to you by Steve Goodman, Tony Ericson, Terry Murphy and Barbara Craven, the founding partners of Achievement Coaching International where we help businesses to learn different thinking to enable different actions that deliver the different results that Make the Big Differences that Transform Results.

This series looks at the corrosive and far reaching effects for business profitability, and even survival, of failures in behaviour. It challenges all those that believe in “don’t rock the boat”.

You might also be interested in our "Excellence Quartet" of blogs promoting the cause of Excellence as the key to prosperity. We publish regular articles using a recent business/financial topic to highlight different perspectives and conclusions to those obtained by conventional thinking and techniques. You can read the other four blogs at our web site link page.